Taibbi on LIBOR

[lektrode]

Re: Taibbi on LIBOR

Because if it comes out that these other banks were all involved with this scandal (and it will come out that way, almost for sure), and their CEOs and COOs get to keep their jobs, that'll be a sure sign that the fix is in. Let's hope Ben Bernanke, Eric Holder, and Tim Geithner are listening.

uh huh....




on this one: http://www.againstcronycapitalism.or...ter-schweizer/

caught this one:
http://www.forbes.com/sites/realspin...-big-for-jail/

5/07/2012 @ 5:36PM |16,353 views

Obama's DOJ And Wall Street: Too Big For Jail?

By Peter Schweizer

“The appearance of conflict is as dangerous to public confidence in the administration of justice as true conflict itself. Justice must not only be done; justice must also be seen to be done.” –Lloyd Cutler, 1981

Over the past three years, the Department of Justice has filed criminal charges against hundreds of ordinary Americans for financial fraud. But no one from the largest banks and firms on Wall Street have been similarly charged for events leading up to the financial crisis. Could that be because those banks are clients of the firms from which top DOJ officials hail?

In November 2009, President Obama established the Financial Fraud Enforcement Task Force to deal with financial crimes related to the 2008 financial crisis. As Attorney General Eric Holder, chairman of the Task Force, explained at the time: “This Task Force’s mission is not just to hold accountable those who helped bring about the last financial meltdown, but to prevent another meltdown from happening. We will be relentless in our investigation of corporate and financial wrongdoing, and will not hesitate to bring charges, where appropriate, for criminal misconduct on the part of businesses and business executives.”

None of that happened. The Task Force is still humming along almost three years later, but its highlighted successes are less “business executives” than ordinary Americans who have had the book thrown at them.

From their website:
“Three Connecticut Women Charged with Overseeing ‘Gifting Tables’ Pyramid Scheme.” Three women in their 50s and 60s have been indicted on conspiracy, tax and wire fraud charges. “These arrests should send a strong message to all who threaten the financial health of our communities,” said one federal agent.

Ten people in Las Vegas have been criminally charged with conspiracy to commit mail and wire fraud in a “scheme to fraudulently control” Condominium Home Owners Associations. They have pled guilty and face up to 30 years in prison.

“Justice Department Sues Princeton Review for Claiming Reimbursement for Tutoring Services It Did Not Provide.” The educational publisher apparently billed the federal government for reimbursements in connection with a federally-funded program for underprivileged children.

“Alabama Real Estate Investor Agrees to Plead Guilty to Conspiracies to Rig Bids and Commit Mail Fraud for the Purchase of Real Estate at Public Foreclosure Auctions.” Steven Cox will get one year in prison because he and some friends agreed not to bid against each other at public auctions and then hold a second secret auction with the properties they purchased. This meant that they ‘artificially suppressed prices…[and] homeowners and others with a legal interest in rigged foreclosure properties receive less than the competitive price for the properties,” reads the Task Force press release. People in several other states have been similarly charged.

“Former Real Estate Appraiser Sentenced in Washington, D.C. to 65 months in Prison for Mortgage Fraud.” A property appraiser goes to jail for fraudulently manipulating mortgage applications while flipping real estate properties. The fraud scheme cost mortgage lenders $2.3 million. A Florida man was sentenced to 14 months in federal prison for obstructing an SEC investigation.

Certainly there have been opportunities to aggressively investigate criminal acts of fraud involving the largest banks and investment houses. The SEC has alleged that half a dozen banks “knowingly” passed fraudulent information along to government agencies and investors. The same charges have been leveled against several of the largest investment houses as it relates to subprime mortgages.

cont page 2

but hey - apparently its MUCH more important to be busting the princeton review....

http://www.wheresourmoney.org/bustin...y-the-numbers/

How many FBI agents does it take to bust one Wall Street crook?

This isn’t the beginning of a joke. It’s one way to measure how serious the Obama’s administration latest highly touted financial fraud task force is about tackling its beat.

The task force is staffed with 10 FBI agents, according to U.S. Attorney General Eric Holder.

You can get some idea of whether that’s an adequate number by comparing it to the law enforcement effort in the wake of the Savings and Loan crisis in the 1980s, a major but vastly smaller financial collapse.

It only cost the taxpayers a mere $150 billion in bailout money, compared to the 2008 banking collapse, which cost us trillions.

Bill Black, a former S&L regulator turned white-collar criminal law expert and law professor at University of Missouri at Kansas City, has been one of the sharpest critics of the administration’s sharpest critics.

Black makes the point that regulators investigating S&L fraud two decades ago made thousands of criminal referrals, and the FBI assigned 1,000 agents to follow up on those referrals. Black says the referrals led to more than 1,000 felony convictions, including the executives of the S&Ls.

Black is just one of many who have noticed that President Obama’s heart has not really been into the task of putting top bank executives in jail.

As recently as December 11, the president told 60 Minutes in an interview: “I can tell you, just from 40,000 feet, that some of the most damaging behavior on Wall Street, in some cases, some of the least ethical behavior on Wall Street, wasn’t illegal.”

Black points out that this at best a non-answer; at worst it’s double-talk. The president says that “some of the most damaging behavior on Wall Street, in some cases some of the least ethical behavior on Wall Street, wasn’t illegal.”

So the reasonable follow-up question would be: where are the prosecutions, over the past 3 years, of the rest of the behavior, the part that was illegal?

The other aspect of Obama’s answer that I find worrisome is the president’s perspective – he acknowledges that he’s making a judgment based on a view from 40,000 feet.

That’s a distance of 7.5 miles. The president isn’t predicting the weather here; he’s talking about whether crimes were committed in the process of the worst financial disaster in almost a century.

Good prosecutors and FBI agents don’t investigate from 7.5 miles away. They get in a suspect’s face, and into their history, find out who their friends and associates are. They dig into their family lives if they need to.
That’s how they operate when their hearts are in it if they want to make the case.

But even when their hearts are in it, good law enforcement people can’t do their jobs without resources.
And that’s a decision the president can make. He doesn’t have to ask Congress.

KROFT: One of the things that surprised me the most about this poll is that 42%, when asked who your policies favor the most, 42% said Wall Street. Only 35% said average Americans. My suspicion is some of that may have to do with the fact that there’s not been any prosecutions, criminal prosecutions, of people on Wall Street. And that the civil charges that have been brought have often resulted in what many people think have been slap on the wrists, fines. “Cost of doing business,” I think you called it in the Kansas speech. Are you disappointed by that?

PRESIDENT OBAMA: Well, I think you’re absolutely right in your interpretation. And, you know, I can’t, as President of the United States, comment on the decisions about particular prosecutions. That’s the job of the Justice Department. And we keep those things separate, so that there’s no political influence on decisions made by professional prosecutors. I can tell you, just from 40,000 feet, that some of the most damaging behavior on Wall Street, in some cases, some of the least ethical behavior on Wall Street, wasn’t illegal.

and back to forbes....

forbes/Schweizer[/I]]
Obama's DOJ And Wall Street: Too Big For Jail?

Page 2 of 2

The SEC has accused a number of banks including JP Morgan, Wachovia Securities, UBS, and Bank of America, of “fraudulently” rigging municipal bond auctions by “entering into secret arrangements with bidding agents to get an illegal ‘last look’ at competitors’ bids.” And they won bids because “the bidding agent deliberately obtained non-winning bids from other provides, and it facilitated bids rigged for others to win by deliberately submitting non-winning bids.” All of these investment houses faced civil charges and paid fines. Meanwhile those fixing HOA elections or residential foreclosure auctions go to jail.

Why these two levels of justice? Could this disparity simply be a case that the big banks will fight charges more aggressively, thus making criminal prosecutions more difficult? Maybe. But it also undoubtedly has something to do with the fact that the top leadership at DOJ is drawn almost exclusively from White Collar Criminal Defense Practices at large firms that represent the very firms that Justice is supposed to be investigating. Covington and Burling, the firm from which both Attorney General Eric Holder and Associate Attorney General and head of the criminal division Lanny Breuer hail, has as its current clients Goldman Sachs, Bank of America, JP Morgan, Wells Fargo, Citigroup, Deutsche Bank, ING, Morgan Stanley, UBS, and MF Global among others. Other top Justice officials have similar connections through their firms.

White Collar Criminal Defense work has become one of the few revenue bright spots for large firms. According to a detailed analysis by the Professor Charles D. Weisselberg of UC-Berkeley in the Arizona Law Review, there is big money to be made because “this area of practice is not susceptible to the same types of cost controls” that apply to other legal work. In short, white collar criminal defense work is “enormously lucrative.”

Eric Holder left Covington with a $2.5 million salary and a seven figure bonus. If he returns to Covington (as two of his colleagues at Justice already have) a similar payday certainly awaits him.

Lloyd Cutler, who served as White House Counsel to President Carter, argued in the Robert Tyre Jones Memorial Lecture on Legal Ethics back in 1981 that “integrity is not enough.” It’s not enough to simply proclaim that Justice officials will do the right thing. You need to know that they are making decisions that don’t have ethical entanglements. He argued that conflicts arise “when a private lawyer enters government service and a matter comes before him affecting his former law firm or its clients.” Relationships are key at this level of the legal profession and he warned that lawyers at a firm like Covington “operate at somewhat more distance, their friendships and loyalties—not to mention their financial interests—tie them closely to the corporate officers.”

Peter Schweizer is the author of “Throw Them All Out”.

and finally.... this one about sums things up...

playing the three monkeys game:

[c1ue]

Re: Taibbi on LIBOR

What's sad is that for all the 'action', or lack thereof, in the US, even our rhetoric is pretty pathetic compared to what is bruited about in Russia:

http://www.carystreetpartners.com/in...y_id=174050905

Address at the plenary session of the XVI St Petersburg International Economic Forum
PRESIDENT OF RUSSIA VLADIMIR PUTIN: Good afternoon, ladies and gentlemen, forum participants, friends:
It is my great pleasure to welcome you to the St Petersburg International Economic Forum. I would like to share with this representative audience our plans for Russia's transformation and to outline my vision of the situation in the global economy. But first let me say a few words about the G20 Summit, which has just concluded, and tell you about its work.
The countries meeting at the summit account for about 90 per cent of global GDP. Overall, the discussion's participants share the view that the situation in the global economy looks quite alarming, but that is nothing new for the people who have gathered today in this hall. There are great many imbalances and accumulated debts. You are all aware of the situation in the leading eurozone countries: Germany has 81 per cent, France - 86 per cent, the United States - 104 per cent and the figure for Japan is even higher. This undermines the confidence of the business community and makes investors wary.
Leadership and responsibility amid crisis
Unfortunately, along with the shortage of finance and budget deficits there is also a lack of decisive actions. We see how many basic and obvious steps are postponed due to political, party or group conflict, due to the current political climate, because of the political agenda in the leading economies, while half-measures only exacerbate the situation.
Europe is facing growing risks. The stock exchanges are showing diminishing confidence in the financial stability of major European countries. Regrettably, the core eurozone countries cannot halt the descent into a new wave of recession. They have still failed to reach agreement on the ways out of the economic crisis. However, I very much hope that the next top-level meetings in the euro area will result in such consolidated solutions.
Unfortunately, the crisis is not localized, and it is natural that the signs of deceleration in business activity and slowing of economic growth are becoming increasingly apparent among the developing economies. However, the results of the elections in Greece, the choice of the Greek people, the determined attitude the European Commission, the European Union as a whole and some of the leading European countries in achieving financial discipline and the elimination of imbalances in the economy inspire cautious optimism.
Russia believes there is a need for urgent coordinated action in order to restore and reinvigorate global finance and their rigid adherence to the fundamentals of the real sector of the economy. In addition, it would be fair and reasonable to raise the issue of strengthening the role of the so-called developing countries and new economic powers in the elaboration and adoption of steps shaping the global economic order.
This was discussed at the meeting of the BRICS leaders, which was held on the sidelines of the G20 Summit. The group includes Brazil, Russia, India, China and South Africa. These countries not only confirmed their resolve to contribute to the implementation of stabilization measures, to strengthen the stability of the global economy, but also took concrete steps in this direction: they have assumed the obligation to contribute an additional 75 billion dollars to the IMF.
Our wish to influence the way in which these funds will be used is natural. We believe that we must proceed from declarations to the actual reform of the IMF and other international financial institutions, a reform that will reflect the new economic balance of power. In general, we must talk about the development of viable updated rules for world trade and mutual investment, the practical resolution of issues of sustainable development, including energy security.
I stress that we intend to give priority to all of these issues and to actively promote them during Russia's upcoming presidency in G20 in 2013. We proposed to our partners that next year's summit is held here, in St Petersburg.
The time has come for the G20 to take on the full responsibility of effective leadership. This means that the G20 should not turn into another elite club that cares only about its members. Selfishness and backroom deals do not add to stability and confidence.The G20 is to become a venue for elaborating fair rules for the sustainable development of the entire global economy. The intercontinental nature of the global economy, where all states depend on each other today entails the global nature of responsibility - for the world's leading economies first and foremost.
This also applies to the countries that emit reserve currencies, in other words, the countries that run the printing press, as well as those states that are major holders of gold and currency reserves and thus ensure the stability of the international financial system, and, of course, those states that have the biggest national markets and natural resources, and which therefore largely determine the overall global growth dynamics. We must not only act together and implement a coherent policy, but also be aware of how decisions taken at the national level will affect the situation on a global scale.
I want to note here that Russia is guided by just such a responsible approach. For example, despite the problems in the eurozone, we keep a large part of our international reserves in euros and do not take any unilateral steps that could complicate the already difficult situation for the European currency. We realize that today the prosperity of the whole world to a large extent depends on the actions of the eurozone leaders. Therefore, we support our European partners on the basis of our shared long-term goals.
Moreover, I believe that we should learn together from the situation in Europe and propose global initiatives that would prevent the recurrence of similar crises in other parts of the world.
In general, effective leadership and responsible course of action require today realistic solutions and actions that can boost confidence. That means a balanced budget policy, control over state debt and fiscal discipline. We must be able to state the truth and take responsibility. Rampant financial speculation and political populism are equally dangerous. There is no room for bubbles and pacifiers in politics or in the economy.
Finally, leadership means the ability to find a fundamental way out of global stagnation and instability, to propose and implement a long-term development strategy. Those who will do this first will achieve a strategic advantage.
The leaders who will be unable to bring about the desired results, who will not be able to give people hope for a better future, for good jobs, risk plunging their countries into the abyss of social and political instability, and all kinds of conflicts. Therefore, sustainable development today is a leading issue on the national agenda of every country in the world; it is the foundation of global security and the proper alignment of the entire system of international relations.
"Programme of large-scale transformations"
Ladies and gentlemen:
Here in Russia we have developed a programme of large-scale transformations, which has received wide public support. I consider its implementation a major challenge of my presidency.
What are our goals? They include the consolidation of Russia's existing natural competitive advantages, the development of new opportunities in the global economy, stable national development, the state effectively serving the interests of the public, and law enforcement and judicial systems that enjoy the unconditional trust of citizens.
We hope that this will create new opportunities for the self- realisation of Russian citizens, a new quality of life and modern jobs; that it will improve education and healthcare and help in addressing housing issues.
For business it means creating the best conditions for investment, running your own business, setting up new companies and industries, free and fair competition, and ample opportunities for innovation.
I would like to focus on the principles of our economic policy in greater detail. In particular, I think I should reiterate some of the previously expressed ideas, because the business community and investors should feel that the authorities are consistent and predictable in their actions while maintaining continuity and without revising the declared objectives.
Naturally, everything that we say is easier said than done. I would like therefore to emphasize once again that macroeconomic stability has always been our special priority. This policy has already allowed us to achieve certain results. For example, the inflation rate over the past four years was significantly reduced (although it remains high compared to developed economies): last year inflation in Russia was 6.1 per cent - that is still a lot, but I want to draw your attention to the fact that it was more than halved in four years.
Four years ago, inflation in Russia was more than 13 per cent, whereas last year it was 6.1 per cent, as I said. This is the lowest figure in Russia for the past 20 years. At the beginning of June, inflation was less than 4 per cent in annual terms.
Russia has the lowest state debt among the G8, G20 and even BRICS states: on 1 May 2012 it stood at 9.2 per cent of GDP. At the same time Russia's foreign debt is 2.5 per cent. Also note that Russia is one of the three G20 countries that have a balanced budget. I will come back to this later.
To lessen dependence on oil prices
The current macroeconomic indicators are quite good and acceptable, although there is no cause for euphoria. We are well aware of serious long-term and medium-term challenges for our economy. The economy is still not properly diversified. Much of the added value is created in commodities sectors. There is a high proportion of non-competitive old plants and the level of Russia's dependence on oil prices remains high. We must reduce the dangerously high [budget] deficit if oil revenues are not taken into account. This, as I said at the G20 Summit, is the Achilles' heel of our economy.
In an era of high volatility, such an economy is very vulnerable and subject to significant risks. That is why Russia needs not just a deficit-free budget but a budget with a margin of safety, one that is not based on the oil and gas income. It should be based on non- oil revenues and the proceeds from the sale of hydrocarbons must be allocated a secondary role.
Therefore, in the near future we will adopt a new fiscal rule. Its logic is that the volume of our commitments, budgetary expenditures and long-term investment programmes with state participation must not be bound to the current oil price. As for the oil windfall, it will primarily be directed towards the reserves.
Russia's forex reserves world's third largest
At the same time the Central Bank will continue its flexible exchange rate policy. Today, it is already making a major contribution to reducing the dependence of the real economy, of our producers, on external fluctuations, reduces the interest in speculative currency exchange transactions and allows us to curb inflation.
Please note: we will not depart from the principle of free movement of capital and will not impose any restrictions in this area. We realize the importance of transparency in this issue for investors who plan to invest their capital in Russia. I want to draw your attention to the fact that even in the most difficult period of the economic crisis, in 2009, the Russian Government did not impose limitations on the export of capital. It is true that we lost a significant amount of currency resources, but we proceeded from Russia's long-term economic interests, and long-term interests require the confidence of investors. We intend to continue this policy in the future.
The past period has shown that abrupt, tough decisions and administrative restrictions in the economy do not work. To effectively counter the economic turbulence, the government and financial authorities must have a set of crisis management mechanisms, as well as sufficient internal sovereign resources that can be used in any situation.
In this regard, let me remind you about the situation last autumn. The banks in many countries around the world were facing a liquidity crisis. Joint actions of our financial authorities - the Finance Ministry and the Central Bank - ensured the smooth operation of the Russian banking system. Within a short time the Finance Ministry alone granted over 30 billion dollars to credit institutions, and it achieved that without opening Russia's reserve funds, which are also quite sizable.
The Central Bank's foreign currency reserves, which are the third largest in the world, amounted to over 512 billion dollars as of 8 June. In addition, we have the reserve funds of the Government of the Russian Federation: the Reserve Fund, with more than 60 billion dollars, whose objective is to quickly resolve current problems, and the National Welfare Fund, which we use to support the pension system and which amounts to another 85.5 billion dollars.
I want to emphasize that today Russia has sufficient reserves at its disposal and a whole range of anti-crisis rapid response mechanisms, including subordinated loans, state guarantees and programmes to stimulate demand and provide employment support. The entire arsenal was tested and proved to be effective in 2008-2009. And we are prepared to use it promptly and in full in the event of any negative trends in the world economy.
Meanwhile, we realize that the potential crisis may be different both in its duration and the nature of its manifestations. Therefore, I believe it would be expedient to create a full-scale system of forecasting and risk management. We will work on developing a system such as this. When I was Prime Minister, I asked my colleagues to think about designing such a system. The new Government is continuing this effort.
Most of the recent crises arrived in Russia from external sources. And naturally, we could not do anything about these factors. But a sound risk management system allows us to minimize the repercussions of external shocks, and moreover, prevent the emergence of crises due to internal causes, from the accumulation of our own imbalances, which is fundamentally important for an emerging economy such as Russia.
"Building a new economy"; Russia's economic outlook
Ladies and gentlemen, while strengthening the potential of rapid response measures, we work on the assumption that the fundamental solutions lie in building a new economy: an economy that will withstand various types of shocks, one that is capable of rapid growth even under difficult external conditions.
According to 2011 data, Russia's GDP grew by 4.3 per cent. This was the highest rate of growth among major European economies and one of the highest among the major economies of the world - only China and India were ahead of us.
As for unemployment, this is also among the most important indicators not just for social well-being, but for the economy itself. In May, unemployment fell down to less than 5.4 per cent in Russia. This is much lower than the pre-crisis level. As you recall, unemployment in Europe is at 11 per cent - the highest level in 16 years.
Granted, things in Russia aren't all serene and smooth, because although our unemployment is at a low level (5.4 per cent, as I said), it varies greatly from region to region. In the southern part of our nation for example, in the North Caucasus, in some republics, it is still extremely high. But again, it is a good figure for our nation overall.
That said, this low unemployment rate also speaks to the fact that extensive growth opportunities available due to idle production capacity and worker availability have almost been exhausted. Further development is only possible on the basis of high investment activity, high labour productivity, modernization of existing manufacturing facilities and jobs and the creation of new ones.
What reference points are we determined to use here? By 2020, Russia plans to have created or modernized a total of 25 million jobs. We need to eliminate archaic, ineffective jobs from the national economy. Only then will we be able to respond to citizens' demands for modern, well-paid jobs, offering new opportunities and social prospects for today's generation of workers as well as future generations - in other words, for graduates of our universities and professional schools.
First and foremost, the economic effect of having millions of new jobs will be an increase in productivity, no less than 1.5-fold by 2018. This is a very complicated challenge, but we must set ambitious goals for ourselves, and only then will we consistently move towards our targets.
New jobs will mean a fundamentally different economic structure and stability, and at least a 1.3-fold increase in the share of GDP from high-tech sector production by 2018. At the same time, Russia must make itself known as an exporter of innovative goods and services.
New jobs are being created, of course, through investment. It is imperative that we increase their volume by 2018, to 27 per cent of the GDP. Is that a lot or a little? I feel that it is an absolutely realistic goal, given that today, it stands at 20 per cent. In that time, we need to raise it by seven per cent.
"Commissioner for Entrepreneurs' Rights"
And naturally, when we talk about investment, we primarily mean private investment. We understand very well that we must offer investors exclusive conditions to compete for these investments, so that the investors ultimately choose Russia. This is why we feel creating an investment climate that is not just favourable, but truly better and more competitive, is a key issue in state policy. And by the end of this decade, Russia must be among the top 20 nations in the world with the most comfortable business climate. This, too, is a fairly difficult and ambitious goal, given our position today.
We have already created very specific road maps for eliminating administrative barriers in areas such as connection to energy grids, construction, customs procedures, foreign trade transactions, registering businesses, and filing tax reports.
I want to particularly stress that we are conducting this work jointly with our nation's leading business associations, within the framework of the national entrepreneurial initiative. And the results of our joint efforts certainly shouldn't be and won't be diluted.
Much depends on the practical implementation of these road maps. And here, it is imperative to ensure particular monitoring by the government, society, and businesses themselves. That is precisely why an important decision has been made to create a special commission for the implementation of national entrepreneurial initiative. It will include representatives from Russian and foreign businesses, as well as heads of ministries and departments.
But as a great politician of the past once said, "If you want to delay something, create a commission." We know this, we are keeping it in mind, and we understand that it will take time to create an improved system of government services for businesses. And the current problems, when an entrepreneur faces the violation of his or her rights, bureaucratic pressure, corruption or administrative barriers, need to be resolved today - all of those problems.
That is also precisely why a special new institution of Commissioner for Entrepreneurs' Rights is being created in Russia, in close contact with businesses, - I want to emphasize that it will serve both Russian and foreign businesses. The Commissioner will have the right to defend businesses' interests in court, to stop departmental or regulatory acts ahead of courts' decisions and turn to the courts to quickly halt actions by bureaucrats. Naturally, to do this, we will need to make corresponding amendments to our legislation. I can see several State Duma deputies present today, and I address them with a request to quickly take those decisions.
Following consultations with the business community, a decision has been made to appoint Boris Titov, chairman of the Delovaya Rossiya (Business Russia) entrepreneurial organization, as the federal commissioner.
We conducted preferential voting: practically all the entrepreneurial communities suggested Mr Titov as a possible commissioner. A corresponding executive order will be signed very soon. The office of the federal commissioner will begin work in just a few weeks.
I think that the Prosecutor General's Office should also give this area of work particular attention, so that the commissioner can work directly with the law enforcement system.
New privatization to be nothing like "dubious deals" in the 1990s
In meetings with businesspeople I have often heard complaints about the unfair conditions of competition, including from the excessive state presence in the economy, the fact that state-owned companies enjoy preferential treatment, operate outside the rules of competition, and occupy the space in which private business should operate.
Today I want to reaffirm our principled position: the state will gradually withdraw from a variety of industries and assets. The plan for the privatization of federal property has been approved and it will be executed. I should add that similar privatization plans will be adopted at the regional level.
I want to emphasize straight away that it must be a fundamentally different privatization, one that has nothing to do with the practice of loans-for-shares auctions and other dubious deals that were widely used in the 1990s, when state-owned assets created by the previous generations of our people were acquired in corrupt deals that involved the abuse of power at markedly lower prices, often simultaneously and with the use of the state's own funds.
This eventually corrupted entrepreneurial motivation, had a long- term negative effect on business ethics and led to profound systemic problems, including on the psychological and mental level. I am sure you will agree that it is difficult to demand public respect for property acquired in corrupt deals.Unfortunately, and I have to admit it, the latest steps in this area demonstrate that little has changed since those times. I state this with deep regret. Therefore, it is obvious to us that the new privatization should be unconditionally accepted by the Russian society, and hence it must be clear, fair and equitable, based on open and competitive sale of state assets, which will go to the best buyer who offers to pay the real price.Only by observing these principles can we ensure that the federal budget will receive adequate revenues and the assets in question will get efficient owners, who plan to develop production rather than just sell it on. Most importantly, this is a way to maintain order and public respect for the institution of private property and such values as economic freedom and entrepreneurial initiative.If we secure unconditional public confidence in these values, we will be able to build and strengthen effective safeguards for the protection of private property, qualitatively change the work of the law enforcement and judicial systems, doing everything necessary to make sure they protect the interests of bona fide participants in economic activity, and not serve as an instrument of pressure on business.Honest, fair privatization, breaking the link between property and the authorities is a very powerful and real anti-corruption measure. Unfortunately corruption is without exaggeration the biggest threat to our development. The risks are even worse than the fluctuation of oil prices. People are tired of everyday corruption, of bribery in the state bodies, courts, the judiciary and state- owned companies.This is a difficult task, and we have talked about it a lot and often in recent times. This problem is not easy to solve, but it is impossible to pretend that it does not exist. We must talk about it and look for tools to help us tackle it. And we will do just that, including by attracting to the civil service people with different motivations, professional and efficient managers. The privatization is necessary for us to build a modern economy, to reduce the risks associated with poor management and to ensure equitable conditions of competition.I want to stress once again that our goal is not to build state capitalism. At the same time, privatization must not lead to the emergence of private monopolies to replace the state-owned ones. We all know that without healthy competition a market economy is as prone to decay as the command-administrative system.It is impossible to become truly competitive in the international arena without honest domestic competition, without the rule of law, without truth and justice in relations between business and the state. Competition in politics and the economy is the main engine of development. So I ask the Government of the Russian Federation to conduct a major revision of the practice of antitrust legislation and competition support. It must be done in close contact with the direct participants in the economy.
We would certainly welcome our foreign partners taking part in privatization deals, but these must be genuinely serious strategic investors who will bring with them to Russia modern technology, experience in organizing production, and big export orders.Let me say that we already have this kind of positive experience of working together with foreign investors. We have carried out just this kind of work together in the power sector with foreign investors over recent years, and I must say that even after the global financial and economic crisis swept the world, the foreign investors who invested tens of billions of dollars in our generating facilities behaved exceptionally bravely and took a very professional line indeed. I hope that this kind of cooperation with Russia's regional and federal authorities will continue not just in power sector but in other sectors too.
Government's interest in long-term foreign investment in Russia
Ladies and gentlemen, today's global instability makes the quality and nature of investment extremely important. Portfolio investment can heat up the market fast and make it highly dynamic, but at the same time, such investment is always vulnerable to short- term factors. Investors' enthusiasm for fast-growing high-revenue markets can give way in a matter of mere days to pessimism and capital flight. We in Russia have encountered such situations in the past, and we therefore want to put the emphasis on direct investment, on investment in specific strategic projects.
Russia is now in eighth place in the world in terms of direct foreign investment inflow. Foreign investors put almost 53 billion dollars into the Russian economy in 2011 and the investment growth rate came to 22 per cent. But this is not enough for us to carry out our plans, and we are fully aware of this fact.According to surveys conducted by respected international companies, the number of long-term investors planning to increase their investment in Russia almost doubled over the last six months. In October 2011, 25 per cent of respondents from 150 companies and investment funds had plans to increase investment, but this figure had risen to 48 per cent by April 2012, in other words, almost doubling. We welcome this and will support it in every way we can.
A year ago at the forum here in St Petersburg Dmitriy Medvedev spoke about setting up the Russian Direct Investment Fund. This Fund is now up and running. Its expert advisory board was established in quick time and includes global investment community leaders. The first deals have already been made for a total of one billion dollars, of which 800 million dollars comes from foreign investors' funds.
Practically all centres of global capital - the Middle East, China, Europe, the United States, and Australia - are working with the Fund. Two weeks ago, during my visit to China, the Fund became one of the founders of the Russian-Chinese Investment Fund, which will manage up to four billion dollars.
We will also continue the work to develop an international financial centre in Moscow. We are not chasing illusions here but take a realistic view of the situation. Let me say however, that Russia's financial system has been growing rapidly over these last years despite the problems that many of the big American and European financial institutions are currently going through.
Financial services in Russia
Financial services in Russia are becoming more accessible for businesses and ordinary citizens. Loans to individuals increased by 43 per cent in the last year, and the number of mortgage loans extended increased by almost 30 per cent. Loans to individuals came to 6.4 trillion roubles - 10 per cent of GDP - as of 1 June 2012, and loans to legal entities increased by 25 per cent and came to 34 per cent of GDP.
We are fully aware of the risks involved in this kind of increase in debt. Household debt in the United States, for example, is at very high levels, and this creates problems for the US economy and budget. The budget suffers because such loans were extended against state guarantees as a rule, and this impacts accordingly on public finances. We understand these problems and will proceed very carefully.
Trust in our banking system is growing. Bank deposits increased by almost 25 per cent over the last year, and the inflation rate's decrease means that people do not have to worry so much now about maintaining their savings' purchasing power. Private deposits come to 12.5 trillion roubles - 22 per cent of GDP.
We have taken several measures to make Russia's financial and goods markets more competitive. For example, we have merged the two main stock exchanges, MICEX and RTS, thus creating the foundations for building a major world exchange, where trading will determine the prices of Russia's assets and resources.
This is not all. We passed laws on a central depositary (it came into force on 1 January 2012), preventing the unlawful use of insider information and market manipulation, clearing and clearing activity, and organized auctions. In other words, we are building a serious and thoroughly prepared system for our financial institutions' operation.
Furthermore, Russian companies have begun the move to mandatory publication of their financial statements in accordance with IAS. I think the time has come to take yet another step towards expanding the national financial system's resource base.
Pension savings in Russia could come to more than four trillion roubles - around 120 billion dollars - by 2015. We propose investing part of these savings in long-term reliable bonds for financing infrastructure projects. We would guarantee that these pension savings will remain safe (we all realize that infrastructure projects are always going to be needed after all and will always be put to work in the country), but we must also ensure that these are profitable placements. This is something we must examine thoroughly, and decisions will be made only so long as we can guarantee that this will indeed be both reliable and profitable.
A slice of Eurasian market
We are ready to give investors more than just a new quality of financial, transport and energy infrastructure. A new Eurasian market offering a new configuration and immense potential opportunities is in the process of formation. Russia is developing integration projects in the Eurasian region at a rate and scale not yet seen before. We see integration as one of the most important sources of growth and development.
You know that we signed an agreement on a free trade zone in the CIS. Russia, Kazakhstan and Belarus are already working now within the Customs Union and the Common Economic Space, which create a single market of 170 million people with high education and professional skills levels and growing incomes. These three countries are moving towards even closer integration.
For the first time in the post-Soviet area, a genuine supranational body with real management powers, the Eurasian Economic Commission, has begun work. This Commission will be responsible for coordinating macroeconomic policy, technical regulation, and also competition and natural monopolies measures. We hope that this will significantly increase the quality of decision making in these areas and that business, our own and foreign, will feel the benefits of integration throughout the Eurasian region.
Finally, Russia is set to become a full member of the World Trade Organization this year. WTO membership and the removal of many trade barriers will raise the quality of investment and have a big impact on business development strategy. Investing in Russia will open for investors not just the Russian and Eurasian markets, but international markets too, especially the European market, which remains one of the most attractive in the world even with the problems our European friends and colleagues currently face.
We have made a firm choice in favour of openness and integration into international economic developments. We did not abandon this choice during the trials of the crisis period, and we will not change it now. Indeed, we are stepping up our efforts to have Russia join the Organization for Economic Cooperation and Development. I think this could happen in 2014. Russia will make an active and substantive contribution too, to the discussions on the future global trade rules.
I stress in this respect that we must remove the barriers not only for trade but also for reciprocal investment and for carrying out big transnational projects involving exchanges of assets and technology. We are open for projects of this kind and for foreign investment, including in strategic sectors, but this must be a reciprocal process, a flow in both directions.
Unfortunately, Russian companies wanting to invest in foreign assets sometimes find themselves up against a wall. Mutually advantageous deals fall through on the grounds of obviously invented pretexts that have no connection to the economy. This is not the way real partners should behave.
We do not seek artificial preferences for our business abroad. We simply want equal treatment for all, so that our investors are free to acquire assets abroad through fair and honest competitive procedures, using their competitive advantages without any discrimination.
We think that free movement of investment between countries, along with free trade, could be a catalyst for economic growth at this time of global economic difficulties. We must work together to make effective use of the development opportunities it offers.
Russia's civil society
Ladies and gentlemen, the global development outlook depends not only on our ability to settle the economic problems before us, but also on adjusting state governance mechanisms so that they genuinely work in our citizens' interests, and get our people genuinely involved in setting the national agenda and addressing the key tasks before the country. Ability to achieve this determines the effectiveness and influence of government in any country, and Russia is no exception here of course.
Our position is that the government model at every level - federal, regional, and local - must correspond to the new quality of our civil society that has emerged over this last decade of steady economic growth. This is a healthy process of national development.We are fully aware that you cannot build a modern economy without a mature civil society. The authorities must be ready to reach out to society and be open for dialogue. Only on this basis can we build up mutual trust and ensure stable development without upheavals and dead-end conflicts.
It is my conviction that a democratic political system must guarantee not only legitimate government, but also guarantee people's confidence in its fairness and ability to look after the majority's interests while at the same time also ensuring that the minority's voice is heard and their interests given reasonable protection too. This is the logic we followed in deciding to make it much simpler to register political parties. The country's various political and social groups now have the chance to defend their views and convictions within the framework of the law.
Furthermore, Russia's people will play a more active role in the law-making process. Not only can they delegate their representatives to parliament, but can propose draft laws themselves, directly. Any public initiative that collects at least 100,000 authorized signatures online will be guaranteed examination in the federal parliament.
We will continue to improve our democratic system, including by making use of modern technology such as crowd sourcing. The aim of any transformation is to raise our people's quality of life and give them new opportunities and confidence in the future. This means that each and every one of us (and I stress that this applies to all of us) who wants to get involved in politics and considers themselves a politician must act exclusively within the framework of the law.
The thirst for change is without question a driving force of progress, but it becomes counterproductive and even dangerous when it undermines civil peace and even the country itself. All of us need to understand what things in our political system can and should be improved, and which values and institutions form the country's foundations and cannot be tinkered with.
We need to work through open discussion and dialogue with all of the different political forces to come up with a common answer, accepted by the vast majority of our citizens, on the most effective and suitable democratic and development model for our country.
Ladies and gentlemen, we have drawn up a programme of ambitious transformation for the years ahead. We have everything we need to reach our goals: talented, well-educated people, political will and determination to improve things and change our country. Most important of all, we are aware of our responsibility before our people and the future generations. We are not postponing action for a later date, but are acting now.
Some might say that we could act even faster and more effectively, while others would advise us to slow down the pace and not be hasty. But we are moving forward and will continue to do so. I am confident that we will build a strong, open and prosperous Russia, and we welcome everyone who is ready to work as partners with us.
Thank you very much for your attention.
Originally published by President of the Russian Federation website, Moscow, in English 0700 22 Jun 12.

[don]

Re: Taibbi on LIBOR

+1 to both. Unfortunately, it can appear at times that even Taibbi is drinking a bit of the Kool Aid.

[don]

Re: Taibbi on LIBOR

[don]

Re: Taibbi on LIBOR

as the dust begins to clear on what LIBOR is all about . . .

The Real Libor Scandal ~Paul Craig Roberts and Nomi Prins


According to news reports, UK banks fixed the London interbank borrowing rate (Libor) with the complicity of the Bank of England (UK central bank) at a low rate in order to obtain a cheap borrowing cost. The way this scandal is playing out is that the banks benefitted from borrowing at these low rates. Whereas this is true, it also strikes us as simplistic and as a diversion from the deeper, darker scandal.

Banks are not the only beneficiaries of lower Libor rates. Debtors (and investors) whose floating or variable rate loans are pegged in some way to Libor also benefit. One could argue that by fixing the rate low, the banks were cheating themselves out of interest income, because the effect of the low Libor rate is to lower the interest rate on customer loans, such as variable rate mortgages that banks possess in their portfolios. But the banks did not fix the Libor rate with their customers in mind. Instead, the fixed Libor rate enabled them to improve their balance sheets, as well as help to perpetuate the regime of low interest rates. The last thing the banks want is a rise in interest rates that would drive down the values of their holdings and reveal large losses masked by rigged interest rates.

Indicative of greater deceit and a larger scandal than simply borrowing from one another at lower rates, banks gained far more from the rise in the prices, or higher evaluations of floating rate financial instruments (such as CDOs), that resulted from lower Libor rates. As prices of debt instruments all tend to move in the same direction, and in the opposite direction from interest rates (low interest rates mean high bond prices, and vice versa), the effect of lower Libor rates is to prop up the prices of bonds, asset-backed financial instruments, and other "securities." The end result is that the banks' balance sheets look healthier than they really are.

On the losing side of the scandal are purchasers of interest rate swaps, savers who receive less interest on their accounts, and ultimately all bond holders when the bond bubble pops and prices collapse.

We think we can conclude that Libor rates were manipulated lower as a means to bolster the prices of bonds and asset-backed securities. In the UK, as in the US, the interest rate on government bonds is less than the rate of inflation. The UK inflation rate is about 2.8%, and the interest rate on 20-year government bonds is 2.5%. Also, in the UK, as in the US, the government debt to GDP ratio is rising. Currently the ratio in the UK is about double its average during the 1980-2011 period.

The question is, why do investors purchase long term bonds, which pay less than the rate of inflation, from governments whose debt is rising as a share of GDP? One might think that investors would understand that they are losing money and sell the bonds, thus lowering their price and raising the interest rate.

Why isn’t this happening?

PCR’s June 5 column, “Collapse at Hand,” explained that despite the negative interest rate, investors were making capital gains from their Treasury bond holdings, because the prices were rising as interest rates were pushed lower.

What was pushing the interest rates lower?

The answer is even clearer now. First, as PCR noted, Wall Street has been selling huge amounts of interest rate swaps, essentially a way of shorting interest rates and driving them down. Thus, causing bond prices to rise.

Secondly, fixing Libor at lower rates has the same effect. Lower UK interest rates on government bonds drive up their prices.

In other words, we would argue that the bailed-out banks in the US and UK are returning the favor that they received from the bailouts and from the Fed and Bank of England’s low rate policy by rigging government bond prices, thus propping up a government bond market that would otherwise, one would think, be driven down by the abundance of new debt and monetization of this debt, or some part of it.

How long can the government bond bubble be sustained? How negative can interest rates be driven?

Can a declining economy offset the impact on inflation of debt creation and its monetization, with the result that inflation falls to zero, thus making the low interest rates on government bonds positive?

According to his public statements, zero inflation is not the goal of the Federal Reserve chairman. He believes that some inflation is a spur to economic growth, and he has said that his target is 2% inflation. At current bond prices, that means a continuation of negative interest rates.

The latest news completes the picture of banks and central banks manipulating interest rates in order to prop up the prices of bonds and other debt instruments. We have learned that the Fed has been aware of Libor manipulation (and thus apparently supportive of it) since 2008. Thus, the circle of complicity is closed. The motives of the Fed, Bank of England, US and UK banks are aligned, their policies mutually reinforcing and beneficial. The Libor fixing is another indication of this collusion.

Unless bond prices can continue to rise as new debt is issued, the era of rigged bond prices might be drawing to an end. It would seem to be only a matter of time before the bond bubble bursts.

http://www.paulcraigroberts.org/

[dcarrigg]

Re: Taibbi on LIBOR

Yeah. Let's hope the Fed is listening. Especially now that they know about Libor fixing.

I mean, it's not like they've had years to do something about it and didn't.

Right?

[lektrode]

Re: Taibbi on LIBOR

uhh.... yeah... Right!
if you say so, i'll swear to it....

[lektrode]

Re: Taibbi on LIBOR

as the dust begins to clear on what LIBOR is all about . . .

The Real Libor Scandal ~Paul Craig Roberts and Nomi Prins


On the losing side of the scandal are purchasers of interest rate swaps, savers who receive less interest on their accounts, and ultimately all bond holders when the bond bubble pops and prices collapse.
...
We think we can conclude that Libor rates were manipulated lower as a means to bolster the prices of bonds and asset-backed securities.

The question is, why do investors purchase long term bonds, which pay less than the rate of inflation, from governments whose debt is rising as a share of GDP? One might think that investors would understand that they are losing money and sell the bonds, thus lowering their price and raising the interest rate.

Why isn’t this happening?

PCR’s June 5 column, “Collapse at Hand,” explained that despite the negative interest rate, investors were making capital gains from their Treasury bond holdings, because the prices were rising as interest rates were pushed lower.

What was pushing the interest rates lower?

The answer is even clearer now. First, as PCR noted, Wall Street has been selling huge amounts of interest rate swaps, essentially a way of shorting interest rates and driving them down. Thus, causing bond prices to rise.

there was also a post sometime last week? where the observation was made that the fed is complicit in all this, as well = why the dept of 'justice' isnt taking action...

and isnt the 'short game' precisely what caused the big meltdown to accelerate?

if so, when the ulitmate meltdown in the bond market occurs - which will make some even richer than they got from the prev collapse - wont the fed be then guilty of causing all this to occur in the first place?

and we'll get what? from the beltway.... another dog n pony show about how 'nobody could see it coming'?
and another several thousand pages of regulations that will address, what, precisely?

this must have something to do with the revelation the other day that even tho JPM's 'trading blunder' has been jacked up to 7+billion (and counting, up from 2 when dimon testified in congress), that their stock price ROSE 6% on the week?

ya dont spose somebody knows something here that isnt being said....

[suki]

Re: Taibbi on LIBOR

http://dealbook.nytimes.com/2012/07/...ate-fixing/?hp

According to people briefed on the matter, the Swiss bank

UBS

is among the next targets for regulatory action. The Commodity Futures Trading Commission is pursuing a potential civil case against the bank. Regulators at the agency have not yet decided to file an action against the bank, nor have settlement talks begun. UBS has already reached an immunity deal with one division of the Justice Department, which could protect the bank from criminal prosecution if certain conditions are met.

D-Bags.

[don]

Re: Taibbi on LIBOR

As regulators ramp up their global investigation into the manipulation of interest rates, the Justice Department has identified potential criminal wrongdoing by big banks and individuals at the center of the scandal.

The department’s criminal division is building cases against several financial institutions and their employees, including traders at Barclays, the British bank, according to government officials close to the case who spoke on the condition of anonymity because the investigation is continuing. The authorities expect to file charges against at least one bank later this year, one of the officials said.

The prospect of criminal cases is expected to rattle the banking world and provide a new impetus for financial institutions to settle with the authorities. The Justice Department investigation comes on top of private investor lawsuits and a sweeping regulatory inquiry led by the Commodity Futures Trading Commission. Collectively, the civil and criminal actions could cost the banking industry tens of billions of dollars.

http://dealbook.nytimes.com/2012/07/...ef=global-home

Is the escape tunnel being dug as more malfeasance continues to surface . . .

and how exactly will our TBTDs pay their fines while insolvent . . .

gentlemen, keep a weathered-eye on your 'segregated savings' . . . .

[Slimprofits]

Re: Taibbi on LIBOR

Here's another HUGE shocker:

http://www.huffingtonpost.com/2012/0...n_1674552.html

Tim Geithner's Libor Recommendations Came Straight From Banks, Documents Show

[don]

Re: Taibbi on LIBOR

Was on Viewpoint with the inimitable Eliot Spitzer last night and joined Dennis Kelleher from Better Markets in discussing some of the more upsetting recent revelations from the LIBOR banking scandal -- including most notably the not-so-surprising revelation that Tim Geithner was apprised of the rate-rigging as far back as 2008.

http://current.com/shows/viewpoint/v...-manipulation/

P.S. I advise everyone to check out the Godzilla-v.-Mothra death-battle between Spitzer and Maria Bartiromo from last Friday on her show on CNBC. Maria's always been a little nuts, but this latest crusade to rewrite history and cleanse ex-AIG chief Hank Greenberg of culpability in a fraud scandal that at the time led to the biggest financial settlement ever paid is an absolute head-scratcher.

The confrontation between the two of them on air is epic. In it, Bartiromo blasts Spitzer for going after Greenberg and accuses him of only targeting Greenberg for personal reasons. Spitzer counters by asking her if she's read a judge's opinion ruling that Greenberg had participated in a conspiracy to defraud. "Have you read this opinion?" he asks.

She hedges, pauses, and here's the funny part: Clearly she hasn't read it.

Spitzer asks her again, have you read the opinion? This time she decides to go all in, and immediately says she has read it. "I've read much more than I want to read on this case!" she shouts.

Spitzer then gets so hot that he appears to have a prosecutorial flashback on live TV, saying: "You are under oath right now. I'm going to be very serious with you!" He again demands that she answer the question: Was it not true that a judge ruled that Greenberg had committed fraud?

Humorously, Bartiromo explodes here and then retreats into the unfamiliar/uncomfortable territory of the truth: "I'm not under oath and I am not in your courtroom! You are on my television show!"

Crazy stuff -- see for yourself:

http://current.com/shows/viewpoint/v...greenberg-aig/

The weird thing is, there's nothing terribly complicated about that AIG case. Over a decade ago, AIG's stock was dropping, in part because it was showing poor loss reserves. So beginning in 2000, Greenberg, then the CEO, apparently decided to stop the bleeding by entering into a series of fraudulent reinsurance transactions with General Re, a subsidiary of Warren Buffet's Berkshire Hathaway.

A federal judge, Christopher Droney, ruled in 2008 that it was rational to conclude that the conspiracy to create the artificial reserves began when Greenberg called then-General Re CEO Ron Ferguson to make the reinsurance deal. He wrote:

The government presented sufficient evidence that, starting with Greenberg’s Oct. 31, 2000 phone call to Ferguson, there was an agreement to carry out a transaction to artificially inflate AIG’s loss reserves and deceive AIG’s investors about the amount of the company’s loss reserves and the quality of its earnings.

But this is all old news. AIG long ago settled not just with Spitzer but with three other regulators, including George Bush’s S.E.C. and Justice Department, for the extraordinary sum of $1.6 billion – about three times what Goldman Sachs paid for the biggest fraud case to come out of the 2008 crash.

Greenberg himself settled for $15 million in a civil suit over some related fraudulent transactions, leading to an accounting restatement at AIG of about $2 billion. But characteristically, he later said the restatement was “mostly unnecessary” and that although he paid a $15 million settlement and pleaded the fifth in a deposition, he had “no responsibility” for the fraud that took place while he was C.E.O.

And that, folks, is probably what this whole Bartiromo episode is all about. If you follow any of these Wall Street settlements and investigations, banks and their executives often insist post-factum that they only paid fines to keep regulators off their backs – not because they’re guilty, mind you, but because paying off vengeful, mindlessly angry, and (probably) jealous regulators is part of the cost of doing business when you’re a rich, powerful, successful, and tirelessly ethical financial firm.

Thus the portrayal of regulators and prosecutors as overemotional pit bulls just out for a pound of flesh is part of the continual myth-making effort by Wall Street firms. In this mythical worldview nobody is ever really guilty of corruption charges, either, not even companies that pay billion-dollar fines.

This is why it’s such a problem when the government allows companies to make financial settlements without admitting wrongdoing. Not only do those settlements protect firms from civil litigation, they make it possible for shameless windbags like Hank Greenberg to go on barking about how wronged they were for years after they’ve been caught swindling shareholders and investors. It never ends.

Anyway, later this week: Maria lays a giant egg on Jones Beach, Spitzer saves Long Island by burning it with dragon breath ...

http://www.rollingstone.com/politics...#ixzz20z2p8fFC

[SamAdams]

Re: Taibbi on LIBOR

Was watching Max Keiser. He speculated that the LIBOR scandal proves that the gold-price-manipulation conspiracy theorists might be right. He didn't elaborate but how would this work? Simple buying/selling between the same parties? Is there some kind of "honor system" price reporting in gold markets that I don't know about, a la LIBOR?